Question 1

What are the main types of financial institutions used by consumers?

Accepted Answer

Deposit-type institutions include charte...

Question 2

The yield on a savings account is also referred to as

Accepted Answer

A)   liquidity.
B)   compounding.
C)   asset management.
D)   insolvency.
E)   rate of return.F) A) and D)
G) A) and E)

Question 3

Which of these is not a characteristic of the compound interest bond?

Accepted Answer

A)   various purchase options
B)   denominations of $100 up to $10,000
C)   interest paid on November 1 of each year
D)   can be purchased by cash
E)   cashable at any time for their face valueF) C) and E)
G) A) and E)

Question 4

To avoid high fees for loans, a person should not borrow from a

Accepted Answer

A)   credit union.
B)   savings and loan association.
C)   pawnshop.
D)   commercial bank.
E)   mutual savings bank.F) All of the above
G) A) and B)

Question 5

A restrictive endorsement will usually include the words "for deposit only."

Accepted Answer

A) True 
 B)False

Question 6

All financial institutions are able to process customer deposit and withdrawal transactions.

Accepted Answer

A) True 
 B)False

Question 7

Store credit cards usually charge a lower interest rate than a bank credit card.

Accepted Answer

A) True 
 B)False

Question 8

The "prime" rate is ___________________________.

Accepted Answer

A)   The lending rate banks charge their most creditworthy clients
B)   The yield on 91-day treasury bills
C)   The yield on 30-year government bonds
D)   The yield on 1-year government bonds
E)   The yield on corporate bondsF) B) and E)
G) B) and D)

Question 9

If you think interest rates will increase, you should consider investing your money in a longer-term GIC.

Accepted Answer

A) True 
 B)False

Question 10

A regular savings account usually offers a lower rate of return to savers than other savings plans.

Accepted Answer

A) True 
 B)False

Question 11

The increase in purchasing power of an investment is not reflected in its real rate of return.

Accepted Answer

A) True 
 B)False

Question 12

An advantage of Canada Savings Bonds is

Accepted Answer

A)   interest earned is exempt from federal income taxes.
B)   interest earned is deferred for federal tax purposes.
C)   a guaranteed rate of return.
D)   they can be converted to other types of investments.
E)   they are sold twice a year.F) B) and D)
G) A) and B)

Question 13

The funds deposited in a chequing account can be restricted for use by

Accepted Answer

A)   a holding period.
B)   outstanding cheques.
C)   interest earned.
D)   service charges.
E)   electronic banking.F) A) and D)
G) C) and E)

Question 14

A financial institution organized for the main purpose of providing loans to purchase homes is a

Accepted Answer

A)   mortgage and loan company.
B)   mutual savings bank.
C)   consumer finance company.
D)   credit union
E)   commercial bank.F) B) and C)
G) A) and B)

Question 15

The purpose of a "special" endorsement is to

Accepted Answer

A)   cash a cheque.
B)   deposit a cheque.
C)   transfer a cheque to another person.
D)   withdraw cash from your account.
E)   reduce the charge for service fees.F) C) and D)
G) B) and E)

Question 16

List the 4 chequing account selection features discussed in the text.

Accepted Answer

Restrictions, fees a...

Question 17

Savings compounded ____________ would have the highest effective yield

Accepted Answer

A)   monthly
B)   annually
C)   semi-annually
D)   daily
E)   weeklyF) A) and D)
G) None of the above

Question 18

A $100 savings account that earns $5 interest in a year has a yield of ____________ percent.

Accepted Answer

A)   6
B)   5
C)   4.75
D)   3.75
E)   6.5F) A) and D)
G) A) and C)

Question 19

Based on the following information, what amount would be SUBTRACTED from the BANK BALANCE side of a chequing account reconciliation? Service charge $6, Outstanding cheques $260, Interest $3. 00, Deposit in transit $65

Accepted Answer

A)   $260
B)   $65
C)   $71
D)   $68
E)   $266F) A) and C)
G) B) and D)

Question 20

Store credit cards usually charge a higher interest rate than a bank credit card.

Accepted Answer

A) True 
 B)False

Exam 4: The Banking Services of Financial Institutions

A restrictive endorsement will usually include the words "for deposit only."

Correct AnswerverifiedShow Answer

Savings compounded ____________ would have the highest effective yield

Correct AnswerverifiedShow Answer

A financial institution organized for the main purpose of providing loans to purchase homes is a

Correct AnswerverifiedShow Answer

An advantage of Canada Savings Bonds is

Correct AnswerverifiedShow Answer

The "prime" rate is ___________________________.

Correct AnswerverifiedShow Answer

List the 4 chequing account selection features discussed in the text.

Correct AnswerverifiedRestrictions, fees a...View AnswerShow Answer

What are the main types of financial institutions used by consumers?

Correct AnswerverifiedDeposit-type institutions include charte...View AnswerShow Answer

Which of these is not a characteristic of the compound interest bond?

Correct AnswerverifiedShow Answer

Store credit cards usually charge a lower interest rate than a bank credit card.

Correct AnswerverifiedShow Answer

All financial institutions are able to process customer deposit and withdrawal transactions.

Correct AnswerverifiedShow Answer

Store credit cards usually charge a higher interest rate than a bank credit card.

Correct AnswerverifiedShow Answer

To avoid high fees for loans, a person should not borrow from a

Correct AnswerverifiedShow Answer

Based on the following information, what amount would be SUBTRACTED from the BANK BALANCE side of a chequing account reconciliation? Service charge $6, Outstanding cheques $260, Interest $3. 00, Deposit in transit $65

Correct AnswerverifiedShow Answer

If you think interest rates will increase, you should consider investing your money in a longer-term GIC.

Correct AnswerverifiedShow Answer

The yield on a savings account is also referred to as

Correct AnswerverifiedShow Answer

The purpose of a "special" endorsement is to

Correct AnswerverifiedShow Answer

A regular savings account usually offers a lower rate of return to savers than other savings plans.

Correct AnswerverifiedShow Answer

A $100 savings account that earns $5 interest in a year has a yield of ____________ percent.

Correct AnswerverifiedShow Answer

The increase in purchasing power of an investment is not reflected in its real rate of return.

Correct AnswerverifiedShow Answer

The funds deposited in a chequing account can be restricted for use by

Correct AnswerverifiedShow Answer

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Restrictions, fees a...
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Deposit-type institutions include charte...
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